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Monday, Jan. 28, 2008 | About a decade ago, Richard and Tracy Corona stopped paying income taxes.

Despite earning millions of dollars over that period, the Coronas decided in the mid-1990s that they wanted the government to answer some questions. What gave the federal government the right to collect taxes in the Sovereign State of California, they wanted to know. Why did the government tax their income when the 16th Amendment was never fully ratified, they wanted to ask. Richard, an attorney specializing in contracts and commercial litigation, sent the Internal Revenue Service a number of letters, asking these and other questions.


  • The Issue: A local couple refused to pay income taxes for several years, arguing that the federal government had to answer its questions about the IRS’ right to collect income tax. They are now both headed to prison.
  • What It Means: The couple claimed there are serious flaws in the government’s legal claim to a chunk of their income. They cited past case law and a theory that the 16th Amendment wasn’t properly ratified as evidence for their claim, but experts say the theory is bunk.
  • The Bigger Picture: Across the country, a group of tax protesters use the sale of literature and conferences to push their claim that the government doesn’t have a proper claim to citizens’ income tax.

“It’s just like if a police officer came to your door and asked you for your wallet, you’re going to ask them why they’re doing it. Paying income tax is no different — they just don’t like being asked why we have to pay,” said Tracy Corona, in an interview from her El Cajon home, where she is under house arrest.

A jury convicted the Coronas in June in federal court for various federal tax offences including conspiracy to defraud the United States, income tax evasion and failure to pay income taxes. Altogether, they were ordered to pay the IRS more than $2 million. Two weeks ago, Tracy was sentenced to 30 months in federal prison; her husband was sentenced to 33 months. While their appeal is pending, the couple remains confined to a small area around their home and must wear tracking devices.

The couple has been fighting a losing court battle with the federal government since their indictment in 2004. Tax law experts said they have been duped by a cult-like clan of tax protestors who lure citizens with a tempting proposition: That the federal government doesn’t have a right to collect taxes from them.

Those groups, some of which are well-funded and well-organized, promote their theories online and often travel around the country making presentations at hotels and convention centers. Experts said the promoters of tax protest strategies dupe people into believing theories that rely on far-fetched interpretations of the nation’s tax laws. In return, the proponents of the theories charge premium rates for their literature.

Many so-called tax protesters are merely scam artists looking for naive victims, said Tom Ochsenschlager, vice president of taxation for the American Institute of Certified Public Accountants.

“It’s a cottage industry,” Ochsenschlager said. “People hold seminars, they advertise in newspapers saying ‘Are you a jerk and paying taxes? If you are, you might want to attend our seminar, it’s only $150 and we’ll show you how you don’t have to pay any more taxes.’”

The Coronas said their refusal to pay income taxes traces back to the drafting of the U.S. Constitution and base their argument on what they say are legitimate legal theories. But in interviews their attorneys said they preferred not to delve into those legal theories, saying they were too convoluted and complex to explain.

A taste of the Corona’s arguments can be found in court documents, however. In a 1997 letter to the IRS, Richard claimed to be a “natural born free American National Sovereign Citizen of the California Republic, non-resident alien of the federal ‘United States.’”

And Tracy Corona said her legal argument is rooted in a deeply held belief that paying income taxes is unlawful, even sinful. “In my opinion, it’s stealing. The Bible never condones stealing the fruits of my labor,” she said.

But federal prosecutors told the court that the Coronas are nothing short of con artists, scrambling for an excuse for not paying taxes they knew they owed the American government. Their legal rhetoric is flimsy at best, the prosecutors claimed in court documents, and the basic premise upon which it is built is deeply flawed.

“Disagreement with a tax law is simply not a defense in a criminal tax case,” said Chris Maietta, the federal prosecutor in the case.

Tracy Corona said she’s always had a deep skepticism about the country’s income tax laws. She said her father has spent much of his life researching the legal justification of income taxes and the history of the 16th Amendment, which allowed Congress to collect taxes on citizens’ incomes and passed on much of that knowledge to her.

In 1985, Tracy met Richard. Tracy said her father and husband talked about her father’s theories and that he asked Richard to use his legal expertise to research some of the background to the tax laws and the 16th Amendment. Richard set about the task, and Tracy said that by the mid-1990s he had a number of questions he wanted to ask the IRS.

So he asked.

The prosecutors’ indictment claims Richard Corona sent a letter to the federal government on May 6, 1997, in which he “demanded documentation to prove the IRS’ authority to collect income taxes, and threatened the IRS employee with personal liability for doing her job.” The government alleged that missive was followed by other letters from Tracy Corona in 1997 challenging the IRS’ authority to collect rent payments on her properties in lieu of taxes she owed.

But the IRS wouldn’t answer. Michael Crowley, Richard Corona’s attorney said his client never received satisfactory answers to the legal questions that had formed out of his research.

Instead, by 1999 the IRS had placed liens on several of Richard Corona’s properties and Corona was informed he was under investigation. Tracy said her husband decided to re-mortgage one of his commercial properties and pay his back taxes. Crowley said Richard Corona paid all the taxes he owed in 1999 along with significant fines and interest.

But the IRS wasn’t finished with the Coronas.

In 2004, Richard and Tracy Corona were indicted on five counts including charges of conspiracy to defraud the United States, income tax evasion and failure to pay income taxes. Rather than rolling over, the couple pleaded not guilty and decided to fight their philosophical battle in court.

Maxine Dobro, Tracy Corona’s attorney, said her client’s defense relied on displaying that she held a good faith belief that she didn’t have to pay income taxes. Her defense hinged on proving to the jury that she genuinely believed she didn’t have to pay the taxes, and thus wasn’t willfully deceiving the government. Tracy Corona essentially tried to convince the jury that she wasn’t just clutching at an excuse for why she refused to pay the taxes.

She failed.

Richard Corona’s defense was slightly more nuanced. Crowley said his client claimed not only that he had a good faith belief that he didn’t have to pay the taxes, but also that he deserved answers from the government to his legal questions, and that he never received them.

“Basically, what Mr. Corona was asking for was for them to explain to him why his legal research was wrong,” Crowley said. “He spent his whole career on behalf of small contractors with the United States government, litigating when they have been ripped off. You always start by saying ‘Here’s our theory as to why you should have paid this, why didn’t you pay us, please respond.’ Sometimes things are resolved at that point and sometimes factual issues have to be determined by the court. That’s what Mr. Corona was expecting in this situation.”

Maietta, the federal prosecutor, said there was plenty of evidence to show that the Coronas not only knew they had to pay taxes, but that they were using their tax protestation arguments as a thin disguise for simply avoiding to pay their taxes. Maietta said the Corona’s own accountant had urged them to pay the taxes and that the defendants had filed proper tax returns up until 1996.

“Their actions proved they knew exactly what the law was,” Maietta said.

Crowley said his client has no intention of dropping the issue. Richard Corona intends to keep on fighting the case until he gets the answers to his questions, Crowley said.

Tracy Corona said she remains a steadfast supporter of the movement to refuse to pay income taxes. In support of her position, she cited websites that offer support and information for tax protesters. The websites she cited contain video streams refuting 9/11 alongside homemade newscasts of popular tax protesters. They also sell literature and videos purporting to show buyers how to legally avoid paying income taxes.

Tracy Corona said she’s not a tax cheat. She said she’s happy to pay taxes on things like fuel and groceries and that her property taxes go towards providing services just like everybody else’s. She said what she objects to, specifically, is paying taxes on her income.

“If they raised the fuel tax tomorrow, of course I’d pay it, because I’m using the roads every day,” she said

And asked if the 10 years of frustration, financial woes and court dates were worth it to make her point, Tracy Corona thought long and hard. Offering a non-committal answer, she instead clarified why she thinks taking on the government on the issue of income taxes is so important.

“Our founding fathers lost their lives, their fortunes and their families to found this country. It’s hard to do the right thing, and sometimes it’s just not pretty,” she said.

Please contact Will Carless directly with your thoughts, ideas, personal stories or tips. Or send a letter to the editor.

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